SOURCES OF

WORKING CAPITAL
WORKING Working Capital (WC), also known as Net Working Capital (NWC), is the
difference between a company’s current assets and current liabilities.
CAPITAL It is a good indicator of a business’s liquidity and short-term financial
health and its ability to utilise its assets efficiently.
TYPES OF
SOURCES OF CAPITAL

Short term
Long term.
SHORT TERM LOANS FROM
COMMERCIAL BANKS
PUBLIC DEPOSITS
TRADE CREDIT
BILL DISCOUNTING
BANK OVERDRAFT
ADVANCES FROM
CUSTOMERS
LONG TERM
SHARE CAPITAL
LONG-TERM LOANS
DEBENTURES
 VARIOUS COMMITTEE REPORTS ON

WORKING CAPITAL
THE FOLLOWING COMMITTEES WERE
ESPECIALLY APPOINTED FOR
THE PURPOSE TO ADMINISTER
THE WORKING CAPITAL.

1. Dheja Committee Report 1969

2. Tandon Committee Report 1975
3. Chore Committee Report 1980
4. Marathe Committee Report 1984
 DHEJA COMMITTEE REPORT
1969
FINDINGS
1. GENERAL TENDENCY WAS FOUND
AMONG THE FIRMS TO AVAIL THE
BANK CREDIT MORE THAN THEIR
REQUIREMENTS.
2. ANOTHER TENDENCY WAS AMONG
THEM THAT THE SHORT TERM
CREDIT WAS GENERALLY MADE USE
OF BY THEE FOR THE ACQUISITION
OF THE LONG TERM ASSETS
3. THE LENDING THROUGH CASH
CREDIT SHOULD BE DONE ON THE
BASIS OF SECURITY IN ORDER TO
ASSESS THE FINANCIAL POSITION
OF THE FIRM
RECOMMENDATIONS
1. APPRAISAL SHOULD BE DONE BY
THE STUDY CARRIED OUT ON THE BANKERS ON THE PRESENT
THE CREDIT NEED OF THE AND FUTURE PERFORMANCE OF THE
INDUSTRY AND TRADE AND FIRMS
HOW THAT NEEDS INFLATED 2. THE TOTAL DEALINGS ARE
AND SUCH TRENDS WERE SEGMENTED INTO TWO CATEGORIES
CHECKED" BY THE UNDER VIZ CORE AND SHORT-TERM NEEDS
THE CHAIRMANSHIP OF 3. THE COMMITTEE SUGGESTED THE
DHEJA COMMITTEE. FIRMS TO MAINTAIN ONLY ONE
ACCOUNT WITH THE ONE BANKER
FOR HUGE AMOUNT OF
BORROWING, CONSORTIUM WAS
SUGGESTED AMONG THE BANKERS
TO LEND THE CORPORATE
BORROWERS
 FINDINGS OF THE COMMITTEE
TANDON
COMMITTEE
1975
THE NEXT COMMITTEE WAS
APPOINTED TANDON COMMITTEE
1975, IN AN INTENTION OF
GRANTING LOANS AND ADVANCES
TO THE INDUSTRY ON THE NEED
BASIS THROUGH THE STUDY OF THE
DEVELOPMENT PROCEEDS ONLY IN
ORDER TO IMPROVE THE WEAKER
SECTION OF THE PEOPLE.
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1. THE BANK SHOULD NOT REVEAL THIS
MUCH ONLY TO LENT TO THE
REQUIREMENTS OF THE FIRM IN
ACCORDANCE WITH LENDING POLICY,
IN SPITE OF THAT THE BANKS WERE
EXPECTED TO LEND TO THE TUNE OF
FIRM'S REQUIREMENT.
2. IT SHOULD BE TREATED AS
SUPPLEMENTARY SOURCE OF FINANCE
BUT NOT AS MAJOR SOURCE OF
FINANCE
3. LOANS WERE LENT ONLY IN
ACCORDANCE ON THE BASIS OF THE
SECURITIES PRODUCED BY THE
BORROWER BUT NOT ON BASIS OF
LEVEL OF OPERATIONS
4. SECURITY COMPLIANCE WONT
PROVIDE ANY SAFETY TO THE BANKS
BUT THE PERIODICAL FOLLOW UP ONLY
SHOULD FACILITATE THE BANKER TO
GET BACK THE AMOUNT OF LOANS AND
ADVANCES LENT
RECOMMENDATIONS:
IT REACHED THE LAND MARK IN STUDYING
THE NEED OF THE INDUSTRIES TOWARDS
THE REQUIREMENTS OF THE WORKING
CAPITAL. THE COMMITTEE HAS SUBMITTED
ITS REPORT ON 9TH AUG, 1975 BY
STUDYING THE LENDING POLICIES.
1. NECESSARY INFORMATION ABOUT THE
FUTURE OPERATIONS ARE TO BE
SUPPLIED
2. THE SUPPORTING CURRENT ASSETS
SHOULD BE SHOWN TO THE BANKER AT
THE MOMENT OF BORROWING
3. THE BANK SHOULD UNDERSTAND THAT
THE BANK CREDIT IS ONLY FOR THE
PURPOSES TO MEET OUT THE NEEDS OF
THE BORROWER BUT NOT FOR ANY
OTHER.
 CHORE COMMITTEE REPORT
1979

THIS COMMITTEE ESPECIALLY CONSTITUTED ONLY FOR THE PURPOSE TO STUDY THE SANCTIONABLE LIMITS OF THE
BANKER AND THE EXTENT OF THE LOAN AMOUNT UTILIZATION OF THE BORROWER. THE ANOTHER PURPOSE OF THE
COMMITTEE TO APPOINT THAT TO PROVIDE THE ALTERNATE WAYS AND MEANS TO AFFORD CREDIT FACILITY TO THE
INDUSTRIES TO ENHANCE THE PRODUCTIVE ACTIVITIES IN THE COUNTRY.
1. CONTINUANCE OF THE EXISTING THREE SYSTEM OF CREDITS BY THE BANKER VIZ CASH CREDIT, LOANS AND BILLS
2. NO NEED TO BIFURCATE THE CASH CREDIT ACCOUNTS OF THE BORROWER FOR THE IMPLEMENTATION OF THE
DIFFERENTIAL RATE OF INTEREST
3. ACCORDING TO THE SPECIFICATIONS OF THE BORROWER, THE BANKER SHOULD COME TO ONE CONCLUSION WHICH
IN NORMAL PEAK LEVEL AND NON PEAK LEVEL OF OPERATIONS ONLY TO THE TUNE OF OPERATIONS
4. NO FREQUENT SANCTION OF AD HOC LIMITS OF BORROWING FROM THE BANKER
5. THE OVERDEPENDENCE ON THE BANK CREDIT SHOULD BE LESSENED AMONG THE PRACTICES OF THE
INDUSTRIALISTS THROUGH EMPHASIZING THE NEED OF TERM FINANCE.
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 MARATHE COMMITTEE REPORT
1984

THE FOURTH COMMITTEE IS MARATHE COMMITTEE WHICH WAS INSTITUTED BY THE RESERVE BANK OF INDIA AND IT
SUBMITTED THE REPORT ON 1983. THE RECOMMENDATIONS WERE IMPLEMENTED BY THE GOVERNMENT OF INDIA
FROM APRIL 1,1984.
RECOMMENDATIONS
1. REASONABILITY OF THE PROJECTION STATEMENTS ARE TO BE STUDIED BY THE BANKS MORE CAREFULLY
2. CURRENT ASSETS AND LIABILITIES ARE TO BE CLASSIFIED IN ACCORDANCE WITH THE NORMS ISSUED BY THE
RESERVE BANK OF INDIA
3. MAINTENANCE OF THE CURRENT ASSETS RATIO 1.33:1
4. TIMELY SUPPLY THE INFORMATION STIPULATED BY THE BANKERS
5. APT SUPPLY OF ANNUAL ACCOUNTING INFORMATION

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